India's Swiggy bets big on cloud kitchens

India's Swiggy bets big on cloud kitchens

Employees prepare food inside a Rebel Foods Pvt cloud kitchen in Mumbai, India, on Thursday, May 2, 2019. Rebel Foods calls itself the World’s Largest Internet Restaurant Company, a boast that’s hard to disprove because there aren’t many chains quite like it. Founded by a McKinsey & Co. alumnus named Jaydeep Barman, the company serves a dozen different menus with everything from cheese-loaded Italian pizzas to 99 variations of the dosa, a popular south Indian lentil-and-rice crepe. Photographer: Dhiraj Singh/Bloomberg via Getty Images

Swiggy, one of the country’s largest food delivery startups, is betting on it. The Prosus Ventures-backed startup said on Wednesday it has established 1,000 cloud kitchens for its restaurant partners in the country — more than any of its local rivals.” data-reactid=”22″>Can cloud kitchens take off in India? Swiggy, one of the country’s largest food delivery startups, is betting on it. The Prosus Ventures-backed startup said on Wednesday it has established 1,000 cloud kitchens for its restaurant partners in the country — more than any of its local rivals.

The Bangalore-headquartered firm said it has invested in over a million square feet of real estate space across 14 cities in the country over the last two years to help restaurant partners of all sizes expand to more locations both within their city and across new cities through cloud kitchens.

Swiggy said it has already invested about $24.5 million in its cloud kitchens business that it calls Swiggy Access, and plans to pump another $10.5 million into it by March next year.

Prosus Ventures, in an interview with TechCrunch.” data-reactid=”25″>Compared to developed nations like Japan and the U.S., India remains a very underpenetrated market for restaurants. “Even in dense areas, you know you need more restaurants,” said Larry Illg, chief executive of Prosus Ventures, in an interview with TechCrunch.

“That’s the value of creating kitchens for delivery platforms. We have the visibility of all the market dynamics. We can look at a location, comb through the data and know what kind of restaurants and food supplies would work there. Over time, you come to realize the neighborhood and their collective behaviour,” he said.

That’s where cloud kitchens could help. For restaurateurs, cloud kitchens reduce the risk when they look for expansion. “You have figured out the menu, and you know the operations. But you still have to take a big real estate risk when picking the location. Kitchens allow them to de-risk all these factors,” said Illg.

Early signs show that the concept of cloud kitchens is working for Swiggy Access partners. The company said one in three partners has been able to expand to a second kitchen within 90 days of signing up. Many restaurants from smaller cities have also expanded into big cities, the startup said.

Swiggy believes that India could emerge as the second-highest number of cloud kitchens after China in the coming years, said Vishal Bhatia, CEO of New Supply business at the firm. A year ago, the company had just 200 cloud kitchen partners.

“The milestone of Swiggy successfully creating over 1000 partner kitchens shows the faith the restaurant partners have in the concept and bolsters our pioneering efforts in enabling more success stories in the restaurant ecosystem,” he said.

Swiggy is also betting that cloud kitchens will help it speed up the delivery time. Swiggy co-founder and chief executive Sriharsha Majety said last month that the company is quickly scaling up “pods” that house cloud kitchens for restaurants in a way that they are “within a 10-minute reach of 99% of their consumers.”

Swiggy added that it is on track to create 15,000 new direct or indirect jobs in the restaurant industry through its Access program by next six months.

Travis Kalanick, founder and former chief executive of Uber, is buying up cheap properties in India and some other markets to scale his cloud kitchens venture.” data-reactid=”34″>The announcement today comes weeks after news broke that Travis Kalanick, founder and former chief executive of Uber, is buying up cheap properties in India and some other markets to scale his cloud kitchens venture.

working with Kalanick on CloudKitchens, the new venture.” data-reactid=”35″>Indian newspaper Economic Times reported earlier this month that Ashish Saxena, former India head of TexMex Cuisine, franchisee for American casual dining restaurant chain Chili’s Grill & Bar in the country, is working with Kalanick on CloudKitchens, the new venture.

pivoted to cloud kitchens. Swiggy claims it leads the cloud kitchens market in the country.” data-reactid=”36″>Food delivery firm FoodPanda, owned by ride-hailing giant Ola, earlier this year also pivoted to cloud kitchens. Swiggy claims it leads the cloud kitchens market in the country.

It will soon have another rival to compete with. American e-commerce giant Amazon plans to soon enter the food delivery business in the country.

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